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tv   Street Signs  CNBC  December 4, 2009 2:00pm-3:00pm EST

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afternoon. i'm simon hobbs in for erin burnett. ahead on "street signs" this friday, highlighting the great divide between main street and wall street, why fantastic jobs data could unseat a market rally built on cheap cash. as manpower's stock jumps, we ask its ceo if they represent the new normal. how some underemployed are taking matters into their own hands. like it or not in washington, the trader tax is gaining traction. will it ever be a badly judged drop in the deficit ocean? news that american employers cut only 11,000 jobs in november and that u.s. unemployment may be peaking out pushed the stock market to fresh highs for the year this morning. but that is now a distant memory. on the trading floors is mike huckman, rick santelli in chicago, and sharon epperson at
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the nymex. let's kick off with you, bob, at the nyse. what happened? >> the dollar rallied again and the big question, the big trade of 2010, simon, is going to be who will get the timing right about when the fed will tighten. if you can get that right, you're going to make the big money. just like shorting the dollar and going long commodities and commodity stocks was the big trade of 2009. there's your dollar and there's what you need to watch throughout the day. this is a very crowded trade. it will take a while to unwind it. take a look at airline stocks. very encouraging news. november traffic came out overnight for a lot of big airlines and generally they were better than anticipated. month to month they have been better than anticipated. these stocks have had a great week. some are up 15% to 20%. bank of america at the close rebalancing in the s&p 500 going to increase the weighting because though sold more shares.
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tradertalk.cnbc.com. the nasdaq is the only one of the three major indices that is still keeping its head above water, up 0.3%. but the triple cues, they are hugging the flat line. the reason we are holding our head above water is you can see the internals by a ratios of 2 to 1. earlier in the day this was something like 4 or 5 to 1 and as always it's tech leading the way higher. the chips are up more than 1%. intel up 2%. marvel hitting a new high, and it's not just the equipmentmakers, but also the software companies like microsoft earlier hitting a new 52-week high, although it has given back much of the gains. right now microsoft up 0.3%. farmers farm farm farm farme
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farmersmarket.cnbc.com. the dollar index is up on the week and it's outing the stock market, call it a signal with regard to the health of the carry trade or let's be lean more direct, that maybe some decent news regarding the economy and jobs is delivered in a more sober way via the dollar the way the credit markets deliver better messages during the credit crisis than equitying. you see that chart. what you don't see is the yen in particular is just getting crushed. one of the biggest down weeks, maybe the most important for you technicians, the next chart, the dow, you know what it's doing, but also remember we made a higher high today. that means it's an outside day on a friday which many times is considered a reversal for the current trend and we know what direction that trend is in. now let's go to sharon epperson at the nymex. >> this trade seems to be completely unwinding. we're looking at gold prices down almost $60. the selling intensifying as we possible margin calls come in. the dollar rally, gold prices
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come off, and oil as we have less than a half hour left in the open outcry session looks like we could test below the $75 mark for the settlement price. it is a huge sell-off in the commodities sector. what did today's job numbers mean for investors and people still seeking work? steve liesman is senior economics reporter at cnbc. david lutz, manager director with stifel nicolaus and ephraim taylor joins me, ceo of incoming, inc. are we saying now we're bottoming out on the jobs situation? >> yeah, simon, most of the economists who look at this say this is the real thing. everybody sort of turned this number six different ways and they say it really is not necessarily a rogue number but a real number and part of what they look at is not just the minus 11,000 but also the revisions to the prior months,
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the workweek increasing. those are the sort of things that suggest we're either at the bottom and possibly closer than we thought, maybe several months closer than we thought to jobs turning up. >> how do i invest now for job growth, particularly given that i might be thinking that the fed is going to raise rates, pull liquidity out of the economy, and the dollar right rise. >> simon, i'm going to tell you right now the employment number was obviously a great number for the dollar. if anything that's giving courage to the dollar bears that are out there that sooner or later as you said we might start raising rates. typically it's 18 to 20 months before the fed starts raising. you couple that with what's going on in japan, that's starting to unwind the carry trade a little bit as far as what the funding currency is. a couple months ago the dollar became cheaper to the yen as far as the carry trade was concerned to fund that trade.
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given the three month libor markets we're seeing that come press quickly. i can only imagine what the libor prints will be like on monday morning. as soon as the dollar becomes more expensive, watch out. you will see a bigger squeeze than you're seeing today. >> ephraim, let me come to you if i may. still within the figures we have 17.2% under employed in america, temporary employees arably who can't find full-time work or those who have stopped looking for work. you're on a 30-city tour to try to empower the unemployment. what is it like out there? >> well, you know, it's really tough and i think a lot of times when, you know, the people that we deal with, they aren't watching cnbc or any networks, they aren't studying the jobs network. they just know they're unemployed. and i believe it's worse in the underserved communities, the detroits, chicagos, atlantas where you have these pockets of people having a really tough time. >> what do you say to them?
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>> what we're encouraging them to do is look at entrepreneurial options, not only in their community, but even look at relocating. i had a lady talking to in detroit, she was saying i'm a highly educated person but i lost my job after 20 years, i said you should consider moving. >> let me highlight one of the hardest hit states in the union. michigan has had the highest unemployment of all the states. currently the jobless rate stands at 15.1%. andy levin is here. i think i'm right in saying you have been hemorrhaging people for some time from your state, certainly over the last eight years. how do you convince them to stay? >> really out migration is not an issue because people can't sell their house and this recession has been very different than earlier ones. what we're focused on is how to create more jobs and train people for new jobs right here in michigan.
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>> just for the record though, the population in 63 of your 83 counties has sunk over the last few years, has it not? >> yes, it has, but if you compare the migration flow for, say, the '81-'82 recession to this recession, there's no recession. so many citizens went down to texas and so forth. now many more of them are staying here and what your last guest just said, entrepreneurism is a great idea for people and also we really are creating new jobs here even as we lose jobs. so, for example, in advance batteries, out of the $2 billion in the stimulus, 12 michigan projects won $1.5 billion out of that. >> and it has to be said yesterday the president talked specifically about michigan and the fact that you have been hardest hit. later in the program we're going to debate whether another stimulus on the jobs front is required. what difference could you guarantee it would make in 2010
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to michigan? >> another stimulus. well, look, earlier when this first stimulus was being discussed, i told governor granholm if we could put a $1.4 billion together, we could create 100,000 new jobs, put 100,000 people to work doing renewable energy and weatherization projects in michigan and train them, a year's employment for 100,000 people. it could make a huge difference and they can reorganize some of the money from the current stimulus, use some of the t.a.r.p. money being given back by the banks. there's a lot of creative ideas out there but we need to create jobs in michigan and across the country. >> andy, thank you very much for your time. >> good to be with you. >> let me come back to steve, david, and he have rephraim. we may have bottomed, we may not, but it's a long haul back, is it not? >> i think the easy answer to
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that is going to be top line growth, and the broadest measure is gdp. if we see that continue to go for a fourth quarter or in the fourth quarter, simon, then i think that's going to be pretty positive news. i think what andy said is something i know other economic officials are very aware of both at the federal reserve and the treasury and that's how the housing market plays into the employment situation. one of the hallmarks of the american labor market has been its mobility, but the housing downturn makes people incapable of selling their homes. it means they can't necessarily move to where the jobs are. that's something that's going to speak to a slower rebound in the jobs market. >> david, on the investing front which is obviously our main purpose on cnbc, as far as structuring a portfolio, will that change for you over the coming weeks? >> absolutely, simon. to a degree we need to be more and more cautious about being short the dollar and long a lot of the commodity stocks. we have been talking about the internals and crude weakening
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substantially because the supply pressures are stating to build up and we have a lot of storage pressures. we're seeing the contango over $9. we have the discount that west texas is trading to brent at a very, very long-time high at the moment, and those are both internal issues as far as crude is concerned. i'm cautious on a lot of commodity stocks. i'm going to be cautious on treasuries because if the dollar starts getting a bid, you will see treasuries selling off as the interest rate moves higher. the dollar index traded through its 50-day today for the first time since april. if it closes up here, that's pretty substantial. we're starting to see some funding coming out of a lot of the financials. the xlf tested its 100-day for the first time since april. last but not least, something to note in the tech sector, the "q"s are doing something interest. they have been selling off because apple's 16% of the ndx. we're seeing a rotation quickly into semi conductors.
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that's a big short cover going on. there's a few things we're looking at. >> all right. ephraim, speaking ever rotations within the labor market itself, of course, we've seen the giant service sector taking a lot of the slack here, 58,000 more people in that, manufacturing declined, construction declined. are people retraining or would you suggest they go to lower paying temporary jobs? >> people are having to make tough choices. people are realizing i have this student death, high education, but in order to feed my family and take care of my children right now i may have to go take that service industry job at half or even a third of what i used to make and people are making those choices. that's why you see so much boom in the industry. it's hard to get somebody to work in it, but now the labor pool, it's a fight out there. people are taking any option that pays more than unemployment. >> thank you. ephraim tailor joining us.
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up next on "street signs," the trader tax gaining ground in washington. what effect would it have on you as an investor, the market, and indeed america's deficit? we'll have both sides of debate after the break. plus, the freelance revolution. how silicon valley is attempting to form its own reboot of america's job market. you're watching "street signs" on cnbc, first in business worldwide. pothole:h no...your tire's all flat and junk. oh, did i do that? here, let me get my cellular out - call ya a wrecker. ...oh shoot...i got no phone ...cuz i'm a pothole...so....k, bye! anncr: accidents are bad. anncr: but geico's good. with emergency road service. ding!
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temporary workers were key in today's job report. they have risen to 52,000 jobs and you have seen some of the temporary staffing agencies jump on the stock market today. some workers are not waiting around to be hired and they are attempting to reshape the workforce as we heard before the break. cnbc's jim goldman has more. >> you know, silicon valley has been down this road before, simon. keep cutbacks, lots of talent on the sidelines. these entrepreneurs are taking recovery into their own hands. ben wilkinson likes his new commute from the kitchen to the dining room. his new office is a freelancer designing websites and advertising for clients. >> quite a journey. it's a lot of unexpected highs, not too many lows. >> reporter: inside natasha's office, her neighborhood coffee shop, she's created a promotional video for a boxing gym.
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>> i provide shooting and editing. i do how-to videos. >> reporter: these are the faces the post-crash economy in silicon valley. highly skilled freelancer working for companies who are reluctant to hire full-timers again. the 12% unemployment is good for independent workers, but the going is still tough. >> you're looking for work constantly but if your work is good, they come to you. >> companies are listing work on sites that match businesses with high-tech freelancers. this is a booming sector. >> we had over 60,000 hiring managers on elance actively working or looking with elancers. our job posting has grown to 20,000 new jobs. joo. >> reporter: wilkinson is starting his own online
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advertising company. >> the thing i value most is being in control of my schedule and hague the time to do the things i like outside of work. >> reporter: adversity breeding opportunity with silicon valley once again reinventing itself one worker, one freelance job at a time. >> this is a big trend around here. as far as elance is concerned, the number of workers hired from this site jumped 40% just since last year and freelancers hired from the site have made over $200 million in earnings, $70 million last year alone. simon, back to you? >> thank you very much for that. jim goldman joining us live from silicon valley. let's focus on the temporary payrolls aspect. temporary payrolls have risen for four straight months. we're still 30% down from where they were three years ago. we've seen the way in which some of those temporary employment agencies have had their stock rise today.
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jeff is chairman and ceo of manpower, one of the world's largest staffing companies and he joins me now. >> good to be here. >> are you preparing now to upgrade your forecast to the market? is this a game changer for you? >> well, we always knew there was going to be some point where we would stop this kind of little baby step growth out of the bottom and hit some kind of inflection point. we tend to be conservative, but what we've seen this last month and what's evidenced by what you see in the data is the economy is coming back, companies are uncertain, and when that is happening, when you get the demand and the uncertainty, it's our team that gets it first, that temporary labor market, and that's what you're seeing in the labor numbers and what you're seeing in the company right now. >> not that it should worry you as a businessman, but of the people you're placing, and i'm mindful you have 17.2% under employment, temporary workers who can't get full-time jobs, how many of your placements do you think would fall into that
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category. >> we have more talent than we know what to do with because they come through our doors. when we talk about temporary work, we do not talk about part-time work. our people are between 30 and 50 hours a week and of that 51,000 jobs i would also say many of those fall into manufacturing. so the bls has us under business services, but probably half of those jobs, 21,000, go up into the manufacturing category which says manufacturing is actually starting to be a little healthier as well. >> there was an op-ed in "the wall street journal" from jody miller suggesting that temporary work should no longer be considered inferior because it's what top talent wants and arguably what the employers want as well, and she says there should be tax breaks and indeed what she calls a two-year peered when the irs can't attempt to take an independent contractor and make them appear to be an employee. would you go far down that line? >> well, you know, we operate, we do $22 billion and of that t
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$22 billion, 90% of that is outside the u.s. outside the u.s. you would see that, you have the benefits, the health care, the benefits. you're seeing about 60% during normal times of the people on our staff getting hired by the companies they're out on assignment to. this is a bridge to employment. it's a way to get trained because we offer thousands and thousands of training courses free and get into an environment so that as it starts to come up, you get to be the first one hired. >> are we, however, at the same time talking about undermining decades of the labor movement here in the united states and ultimately it's okay to talk about people who have power in the labor market. what about those at the bottom, the disadvantaged. will we see a shift in value from the profits ren jated jen generated away from the workers? >> you get this service industry versus manufacturing industry, and some of that is going on. we actually see some manufacturing coming back, but
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the underemployed, the discouraged worker, their best way to get back into the workforce at the beginning of an early part of the recovery is through a company like ours because we have more opportunities right now. >> goldman sachs says it's more than that. they say businesses can squeeze out more productivity. i'm sus pishtion not that it's necessarily wrong, that this might be one way they can do it. >> i'm not sure i would use the word suspicious. it's a sophisticated use. they have spent years working on their supply chain. the holy grail is how do i line my labor up to that just in time environment on the manufacturing or service side? you can't do that with a full fixed workforce because you just can't get flexible and agile enough. >> so in other words what we're say something we're remodeling away from all the problems gm had with the unionized industry and we're doing it by temporary workers. >> i think you're going it by workers who want to work within
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a flexible environment. this is about how a company can flex appropriately in a global environment that is a just in time environment sfp. >> thank you for your time. jeff is the ceo of manpower. could we be entering a period where good news is bad news? we'll check in for a look inside. "street signs" is back after the break on cnbc. welcome to the now network, population 49 million.
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we were up 150 points on the dow this morning when we got that employment data coming through and now you can see at the top of the screen that we're bouncing on the bottom down about 40 points. steve joins us now from wed bush securities where he's managing director. i wonder if today is not one of those where the retail investor cheers the fact that the american job situation is good in the morning and the institutional investors come through in the afternoon and realize it probably means sooner or later an end to cheap money. >> and that's exactly right. i think that we're entering a potential phase here where, as
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you put it earlier, where good news could be bad news. that is the one area that people looked at and say where is bernanke really unable to raise interest rates, what would be the huge political problem for him, and the problem would be trying to raise interest rates or tighten during bad employment numbers. if the employment numbers are going to get better, that's going to give bernanke the ability to tighten at least a little bit, and you have the world, the world into this crowded trade of being short the dollar and long other assets, and so -- >> i suppose the point is here that, yes, the unemployment rate may be about to stall, but it's not as yet coming back down. >> yeah, but people are looking forward and they're seeing a very impressive employment report, one where the unemployment rate started to come down. they're projecting forward and concerned that if that happens, this being short the dollar, long other asset trade is going to start to unwind. >> how do i invest then for job growth? >> well, i think certain common
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stocks are still going to be fine. i don't think the stock market in and of itself will face the vast brunt of this. i think obviously at the same time companies will start to do better, fundamentalis will improving. but when you look at metals or oil, you have to think prices will start to come down. >> oil is slightly different. it's not behaved like gold. it's part of the economic story, doesn't just sit in the bottom of a vault. >> right. exactly right. and on the other hand if the economy is doing better than the price of oil would tend to levitate, but i think many would argue that oil is at a price simply because of a financial trade and that the underlying fundamentals don't justify the price that oil is at. >> let me ask you specifically about gold which will interest a huge number of people watching now. what's your advice there? >> well, i certainly think for -- on a trading basis gold is going to come down.
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it's already come down a lot today. but i think we could see lower prices. it was hyperbolic. it meat a very, very -- a tremendous move to the upside, about you we're back to where it was at seven days ago literally. literally gold is trading at this price a week ago. i think we can continue to see more weakness, especially if we see good economic numbers. that will cause this short the dollar long gold trade to start to unwind. >> have a good weekend, steve. thank you for joining us. we're closing in on half past the hour. let's get a quick check on some of the other business headlines from matt nesto. >> the fcc is asking verizon wireless to explain why it's charging higher early termination fees for some contracts in some cases up to $350 for certain smart phones. verizon wireless tells cnbc, quote, no one is required to pay an early termination fee. always have the choice of buying a mobile phone at full price
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with no fee or you can buy a device at a discount with a one or two-year contract. if you stay with your contract, you don't pay a fee at all. cnbc's fim lebeau has confirmed general's director will become an adviser to chairman and interim ceo ed whitaker. he's been an outspoken critic of gm's management. while the jobs number was the news in the manufacturing sector, factory orders rose in october marking the sixth gain in the past seven months. so now you're up to date, simon. take it away. >> thank you very much, matt. up next, get ready to stop trading. jim cramer will give you his take on the jobs report. and as more banks get the go-ahead to pay back their t.a.r.p., will there be one firm that gets left behind? "street signs" back in a moment. (announcer) we call it the american renewal.
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okay. time to "stop trading" because jim cramer is here. >> how are you, simon? >> i'm very excited by the jobs report.
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>> can i take just a moment and say when you get a positive it's a positive. i do not when i see this number say, oh, fed going to tighten. i do not say dollar going to get strong. i say we have been on life support for a long time and maybe the patient is reviving and not that i'm dr. house, but i am a big believer that if the patient revives it's better than a patient dying. we were in a situation where if we didn't start seeing some progress in employment, 2010 was going to go away for us. most of this market has moved up thinking 2010 was going to have hiring. >> you invest in a different way to others in the market. there are others chasing momentum and chasing- >> right, so i see them throwing away certain stocks. >> you look at the fundamentals. >> with wha i'm looking for is i know what i haven't eaten on. ppg, they are pretty much giving up on this country. there's not going to be a lot of business, so i hear that and i think, you know what?
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we're not going to come out of this recession without a lot of help from the government. i don't want help from the government. i want our companies to do well without the fed. i don't even care if the fed takes rates up a little bit. what we needed to see was this was not going to become a permanent corporate socialism. >> can i ask you what about that bumpy period when they do withdraw the support? will you come out of the market then? >> we are not -- historically we do not have a bumpy period. >> so they can raise rates and pull liquidity and you will be fine. >> when you go from 3% to 5% on the fed funds rate, then believe me what we're going to be saying is here is what i tell you we should sell. every "stop trading" would be what you should sell. i'm not saying you shouldn't be worried about 1 to 3, but there's a natural level that tells me there's health in the system. we're not there. i like health in the system. 1% to 3% is great. when we get above 3% then we're starting to compete against the
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kimberly clarks and the natural 3% yields. i don't want -- that's when i'll get worried. i'm not going to get worried until then. i think it's absolutely right to focus on some big swings like gold, but for people who are just looking at stocks, this is a good day for intel. this is a good day for microsoft, a good day for retail. i don't want to outthink that. it's a good day for bank of america. think about it. could they have raised $1.9 million last year at this time? they raised $19 billion. >> and there have been no sounds if the unemployment begins to abate then rapidly the credit profile of these banks, the consumer credit profile from bad loans to making profits can turn around in an accelerated way. >> there's a fabulous footrace between the banks that are paying you nothing for your money and they invest at the two-year and make a little money and do billions of dollars worth and that's profit and no one really believes net profit. they know it has to go away
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eventually. the idea of the credit profit coming back, of the bad loans going back to good is substantive. but it's a push right now. we have as many people whohink that they will be hurt from that so-called carry trade coming off, the paying you nothing and investing, many people feel they'll be hurt by that and not enough people feel they'll benefit from the credit. this is why that group is dead money or it's been viewed as dead money. what i was hoping is to see the bank of america deal kind of tipped me into being a little more positive than i would be about the banks, but i think that tug of war will be with us and we'll be talking about it for way too long. >> let me get a couple trades in if i may. >> i like this marvelle. these are part of the streaming video. i want people to put in context you pick up the paper and see hulu, when you see this technology which is hand held technology where you watch tv, you got to be thinking akamai, a
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company like marvelle. and this is a broader eer secu thing. you don't have to think about employment. the employment issue is a tough ones in terms of its impact on stocks. i happen to think it's bullish. let's go with longer term themes that do well. the secular growth is really pretty good. >> if you'd like to watch jim you can on the cnbc app. >> yes. that's an example of what i'm talking about. like mlb.com is the one most people know. everybody else is following them. >> good to see you again. thank you for that. jim cramer on at 6:00 tonight at 11:00 eastern on cnbc. still ahead, welcome to the greetings card indicator of the american economy. will next year's economic conditions call for a hallmark moment? plus trader talk, a full debate on sound and fury, but is it time we all face facts? will nothing less than a federal value added tax on the consumption of american's goods
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welcome back. where exactly are we on a tax on financial transactions? we knew that the house speaker nancy pelosi had it on the table and was getting perhaps more favorably a view towards it, but where does tim geithner and the white house stand? joinle ling me is amon. i read perhaps you thought geithner was now in favor of a traders tax. >> that's right. we were hearing from pelosi he's people and sources on capitol hill that that might be the case, but we should be very
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careful about this because i was talking to a source at the treasury department today and they were saying that they wanted to be very, very dlclearn where geithner stands on this issue. what i'm being told this morning is tim geithner has said to capitol hill he is open to ideas to explore the ways in which the banking sector could be expected to pay for bailouts, but that he has not actually heard any transaction tax on trades that he can get behind at this point. they're worried about putting this tax in place and then seeing trading activity flee the united states and go elsewhere and they think that, in fact, if you did this, you wouldn't really generate all that much revenue anyway because the revenue with quickly, very quickly, go overseas. geithner is not supporting any of the current ideas on that right now, but he's open to talking about some kind of pay in which the banking sector could be expected to pay for some of this bailout activity that we've seen over the past year or so. >> where would that discussion
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take us then? >> well, it could take you in a whole range of areas. i mean, including these questions about whether or not there should be some kind of fund established by the banking sector to pay for any potentite future bailouts. that if this money was in the hands of the government at any time to deploy if needed, that would be a restraint by the government against the banking sector to prevent them from needing this kind of bailout in the future. that's been kicked around a lot in washington. >> thank you very much for that update on exactly where we stand. let's bring in now david, who works for public citizen. congress watch. he's a director there. and tim ryan joins us from the securities industry and financial markets association. david, what's your possession on this discussion, be it a trader tax or some other mechanism? >> a speculation tax is really an excellent idea whose time has really come. this idea has been around for a long time. we used to have one in the united states and it didn't stop
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the growth of the stock market. didn't send trades overseas. this is a really, really small, modest measure. you're talking about you invest $100 and you only pay 25 cent fee on that amount of money and there's a bill introduced yesterday that exempts basically anybody in the middle class. it only affects large corporations, the wealthy, and on the other end -- and it's a very small tax anyway, and on the other end it would raise an astonishing amount of revenue. we're talking about a tax that would be just a quarter of one percent and it could raise $150 billion a year. >> tim? reasonable? >> it's a very bad idea and bad timing. i just having listened to your comments about secretary geithner, it seems he understands fully what would happen. this tax would be borne by american investors, mutual fund holders, and it's also incredibly anti-competitive
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because, as secretary geithner has said, it will move activities offshore. so all in all, a very bad idea. >> unless mr. ryan is familiar with the proposals being discussed, there was a bill introduced yesterday that exempts mutual funds and retirement accounts and health savings accounts and education savings accounts and the first $100,000 of transactions. it's only a tax that would fall on speculators and really the super wealthy and in addition there's really no chance that this is going to send jobs overseas or send trading overseas for a couple reasons. first of all, we've got examples out there that contradict that. the uk, there's a speculation tax that's even higher than the one that's being considered in the united states, and it has the highest trading volume of any exchange in europe. >> david, david, i'm from the uk. we don't have that sort of tax yet. >> you're smarter than that. >> do you want to pick up on the
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more substantive point. >> the more substantive point is that the american investor will actually pay this tax, there's no doubt about that. they're all shareholders of these institutions through mutual funds. either they will pay it directly or indirectly. more importantly, if this is not adopted by the entire g-20, it will just force people to move their transactions offshore. >> david, and we could debate whether or not the g-20 will push it through, but you've basically got a budget hole if you look at the projections of $500 billion each year to service the debt being built up. that's education, energy, homeland security, and two wars combined year after year after year. isn't it time that you actually bit the bullet and decided you'd have a value added tax they federal level on all goods and services in america? isn't that the only thing ultimately that's going to help you out? >> well, you know, a value added tax would certainly -- could certainly be a good solution and
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it has -- in addition to raising revenue, if it's not applied regressively, you know, it encourages savings which we've had a problem with in this country for a long time, but realistically, i think that the proposal that is really going to generate revenue very, very quickly, is easy to put in place and there are already proposals if place is this financial transaction tax. we're talking about $150 billion it could raise and a tax that's on wall street who has just benefited from trillions of dollars in government support and guarantees. about time for them to give a little back. >> and that is the issue, isn't it? there's an anger in america and that anger is only going to grow as main street is told of the tax rises it will have to have in the future. how will you and your colleagues on wall street deflect that anger in another direction? >> well, as all of you know, basically main street is supported by activities in the financial sector. so really as wall street goes, it certainly affects the main
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street. right now we're starting to turn a corner. we're seeing a little bit of improvement. we need obviously jobs. jobs should be the number one objective here, and this type of tax is totally counterproductive. >> tim, david, thank you both. have a great weekend. thank you for joining us on cnbc. up next on "street signs," a special report on the last t.a.r.p. bank standing. mary thompson has the details. you're watching cnbc, first in business worldwide.
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welcome back to "street sign signs". construction companies shed 27,000 jobs in december. the sector which includes commercial and residential building has seen an average decline of 63,000 over the past six months. the fdic's sheila bair may ask
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lenders to defer principal on loans. they're looking into further loss sharing for writedowns for as much as $45 billion in mortgages acquired from seized banks. the treasury department is looking for ways to assist troubled homeowners who lost jobs. assistant treasury secretary michael barr said they have to look into that. thank you, diana. cnbc has learned that the treasury will auction more than 88 million jpmorgan chase warrants next week. the treasury had obtained these warrants under the top program. our steve liesman said treasury decided to go ahead with the sale after the sale of capital one financial warrants through strong demand. bank of america, of course, the latest of the banks paying back its t.a.r.p. money. but where is citi in all of this, and could it stand out to be a loser.
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afternoon, mary. >> that's a good question. with bank of america set to repay its $45 billion in debt to the government, citi remains the only bank among the now six firms singled out having received exceptional assistance from the government. citi owes the government $20 billion in t.a.r.p. funds. the government's investment in citi's stock helped to lift the ratio to a healthy 9.1%. typically the higher the better. investors say it's the government's investment in the bank that's one reason citi can't follow bank of america's lead and sell stock to repay t.a.r.p. >> we really can't raise common until the government sells its own common, because that overhang will just hang over the stock. i think you need either one, a simultaneous enormous equity offering, both the government and company raising the capital.
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>> the government is sitting on a nice gain from the investment, having bought the shares at $3.25. still, it is reluctant to sell given citi's improving but still fragile financial state. also with the government owni i 7.7 billion shares, it's tricky. it's one of those six firms receiving exceptional assistance with compensation restrictions which could make it hard to attract and retain talent. that is key to any financial firm's health. they want to hold on to those people. that's one consideration. also, with the government want to hold on to its stake going into the proxy season. any way the government votes on the proxy, it's going to sway. does the government want to get involved in all that mess. they might want to look to exit sooner than that. >> thank you, mary. up next, how a trip down the greeting card aisle can engage the economy. but your trend of the day.
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markets, as you can see, back off their lows now as we head into the final session of trading for the week. does 2009 call for a hallmark warrant? they're expanding their category as difficult times. there are more than 20 cards in the category compared to just five last year. examples include at times like these, family means so much. this wasn't the year that any of us had hoped for. or, we don't have to have a lot to have everything. hallmark tells us these cards were made a year ago. production for next year is under way and the card makers say they have plans to make similar tough time cards in the future. that's it from us on "street signs." "closing bell" continues on cnbc next.
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